Grassley Refiles Bankruptcy Repayment Senate Bill

September 5, 2002 (PLANSPONSOR.com) - A prominent Senator is looking for a way to tap into 'excessive' compensation packages of top executives of companies that have filed for bankruptcy protection.

In that vein, US Senator Charles Grassley (R-Iowa) has reintroduced a measure allowing bankruptcy trustees to recoup the high-flyers’ comp packages within a year of the company’s bankruptcy filing, according to a report from Washington-based legal publisher BNA. If there were any securities or accounting misdeeds involved, Grassley’s bill would keep the door open to recoup the money for four years.

At the very least, Grassley said in introducing S. 2901, his bill would clarify that bankruptcy rules governing recouping of assets from corporate insiders apply to “excessive” compensation like bonuses given to officers and directors.

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Grassley filed the same legislation as an amendment to the recently signed corporate accountability bill, but it was not considered by the bill’s managers, the BNA report said.

In a related measure, Senator Dick Durbin (D-Illinois) and Representative William Delahunt (D-Massachusetts) introduced a bill (S. 2798) this summer.

The Durbin-Delahunt bill would allow bankruptcy courts to look at transfers from a bankrupt company to executives and insiders that are at least 10 times more than transfers made to rank-and-file employees, or 25% more than any transfer made to the executive or insider while the company was solvent.

The legislation also strengthens employees’ hands to file bankruptcy claims.

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